Purush,

It is just a discussion. You said as if you were the final authority. Even IRS decisions are challenged in the court and falsified but we are either simply students or practisioners. Many a time, one court's decision is reversed by another court. There are certain cases where even the CPA's who have practised for decades and PhD's can not respond for sure. 

Rekha has valid point. We may have different points of view.  To me, it is OK to claim as dependent (and file W-7) provided we have enough evidence of support in black and white (like proof of living together, paying bills for her, etc.). Rekha already proved from her calculation that her niece is a resident-alien for tax purpose (B visa is different from F visa!).

Can you please explicitly quote the statement that Rekha presented above is clear enough that prevets her from claiming her niece as a dependent?